During the year, Endeavor Co. received an intangible asset from Allmight Co. in an exchange transaction with commercial substance. Which of the following statements is true? Endeavor measures the intangible asset received at the fair value of the asset given up minus cash paid Endeavor recognizes gain or loss on the exchange for the difference between the fair value of the asset received and the carrying amount of the asset received If Endeavor cannot determine the fair value of the asset received, it shall measure the intangible asset received using the fair value of the intangible asset given up Endeavor recognizes gain or loss on exchange for the difference between the fair value of the asset given up and the carrying amount of the asset given up, regardless of whether cash is received or paid

During the year, Endeavor Co. received an intangible asset from Allmight Co. in an exchange transaction with commercial substance. Which of the following statements is true? Endeavor measures the intangible asset received at the fair value of the asset given up minus cash paid Endeavor recognizes gain or loss on the exchange for the difference between the fair value of the asset received and the carrying amount of the asset received If Endeavor cannot determine the fair value of the asset received, it shall measure the intangible asset received using the fair value of the intangible asset given up Endeavor recognizes gain or loss on exchange for the difference between the fair value of the asset given up and the carrying amount of the asset given up, regardless of whether cash is received or paid

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter8: Investing Activities

Section: Chapter Questions

Problem 6QE

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When nonmonetary assets are exchanged, a company records the cost of the nonmonetary asset acquired at: a.The fair value of the nonmonetary asset surrendered minus cash paid. b.The book value of the asset received minus cash paid. c.The fair value of the nonmonetary asset surrendered plus cash paid. d.The fair value of the nonmonetary asset surrendered plus cash received.
The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset when the exchange has commercial substance is usually recorded at A) either the fair value of the asset given up or the asset received, whichever one results in the largest gain (smallest loss) to the company. B) the fair value of the asset received if it is equally reliable as the fair value of the asset given up. C) the fair value of the asset given up, and a gain or loss is recognized. D) the fair value of the asset given up, and a gain but not a loss may be recognized.
All of the following statements are true, except: When property is acquired in exchange for another, its cost is usually determined by reference to the fair value of the asset surrendered When a group of assets is acquired for a lump sum price, the lump sum price should be allocated to the individual assets based on their carrying values. Donation of PPE should be recorded at the fair value of the donated asset Property acquired in exchange for shares or other securities of the enterprise should be recorded at its fair value or the fair value of the securities, whichever is more clearly evident
The old equipment has an original cost of P1,500,000, accumulated depreciation of P600,000, and fair value of P1,000,000. The new equipment obtained through exchange has a fair value of P1,200,000. The balance was settled with cash. The exchange will not affect the future cashflows of the entity. How much should be recorded as the PURCHASE PRICE of the equipment?
Hartney Company and Indoy Company had an exchange of productive assets. Hartney Company exchanges a building for Indoy's equipment. The following information are as follows: Hartney (Machine) Indoy (Equipment) Cost of asset exchanged P900,000 P800,000 Accumulated depreciation 540,000 320,000 Fair value of asset exchanged 400,000 350,000 Cash received (paid) 50,000 (50,000) Assuming that the transaction has a commercial substance, how much should Indoy recognize gain/loss in the exchange? (Note: Indicate "( )" if loss)
Jersey Inc. and Texas Co. have an exchange with no commercial substance. The asset given up by Jersey Inc. has a book value of $160,000 and a fair value of $200,000. The asset given up by Texas Co. has a book value of $260,000 and a fair value of $280,000. Boot of $80,000 is received by Texas Co. What amount should Jersey Inc. record for the asset received?
Which statements are correct concerning measurement of cost of property, plant and equipment?I. The purchase price of an item of property, plant and equipment is the cash price equivalent at the date of recognitionII. If payment is deferred beyond normal credit terms, the difference between the cash price equivalent and total payment is recognized as interest expense over the life of the asset.III. If an item of property, plant and equipment is acquired in exchange for a nonmonetary asset or a combination of monetary and nonmonetary asset, the cost of such item is measured at fair value unless the exchange transaction lacks commercial substance or fair value of either asset received or given up is not reliably determinable.IV. If an entity is able to determine reliably the fair value of both the asset given up and asset received in an exchange, the fair value of the asset given up is used to measure the cost of asset received in exchange.
An entity that acquires an intangible asset may use the revaluation modelfor subsequent measurement only if A. The useful life of the intangible asset can be reliably determined.B. An active market exists for the intangible asset.C. The cost of the intangible asset can be measured reliably.D. The intangible asset is a monetary asset.
Under IFRS, a company that acquires an intangible asset may use the revaluation model for subsequent measurement only if a. The useful life of the intangible asset can be readily determined. b. An active market exists for the intangible asset. c. The cost of the intangible asset can be measured reliably. d. The intangible asset is a monetary asset.
Sheridan Corp. exchanged similar pieces of equipment with Elongo Corp. No cash was exchanged. Since this exchange will not significantly change the economic position of either company, this transaction lacks commercial substance. At this time, the carrying amount of Sheridan's asset is $37300, while the carrying amount of Elongo’s asset on their books is $33500. However, it has been reliably determined that the fair value of Sheridan’s asset is $37500, while the fair value of Elongo’s asset is $36800. Given these facts, at what amount should Sheridan record the asset it receives from Elongo? $37300 $36800 $37500 $33500 Only typing answer Please explain step by step
Sheridan Corp. exchanged similar pieces of equipment with Elongo Corp. No cash was exchanged. Since this exchange will not significantly change the economic position of either company, this transaction lacks commercial substance. At this time, the carrying amount of Sheridan's asset is $37300, while the carrying amount of Elongo’s asset on their books is $33500. However, it has been reliably determined that the fair value of Sheridan’s asset is $37500, while the fair value of Elongo’s asset is $36800. Given these facts, at what amount should Sheridan record the asset it receives from Elongo? please choose between these three the right answer. .$36800 $37500 $33500
In June 2021, Titanic Company acquired a machine in exchanged for a non-monetary asset with a cost of P1,200,000 and an accumulated depreciation of P600,000 and paid a cash difference of P160,000. The market value of the non-monetary asset was determined to be P650,000. If the exchange ha commercial substance, what amount of gain is to be recognized?